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Layoffs at Obsidian Entertainment
On July 6, Kotaku reported that the layoffs at Obsidian Entertainment are more significant than initially anticipated, affecting between 60 to 70 employees, which constitutes nearly a quarter of the studio’s workforce of 285.
In a surprising turn of events, Obsidian, a renowned RPG studio that had previously weathered the storm of layoffs sweeping through Xbox in the 2020s, is now facing its own challenges. Current and former employees have taken to social media to share their experiences, revealing that an indeterminate number of developers have been let go. Notably, artist Daniel Alpert, who has dedicated 21 years to the company and contributed to titles such as Neverwinter Nights 2, Fallout: New Vegas DLC, Alpha Protocol, and most recently, The Outer Worlds 2, is among those affected. Conversely, engineer Wenzheng Huang, who joined the company just two months ago, also finds himself part of this unfortunate wave.
Kate Dollarhyde, a current employee, has characterized the layoffs as significant in scope. Given that Obsidian employs over 100 individuals, the studio is bound by the WARN Act, which mandates advance notice for layoffs exceeding 50 employees. However, the California WARN Act Tracker does not indicate that Obsidian has reported these layoffs, suggesting that the number could have been between nine and 49 prior to Kotaku’s revelation of the higher count.
Obsidian has seen a remarkable trajectory in recent years, producing critically acclaimed titles such as Pentiment, the breakout Grounded series, and the much-anticipated Avowed and The Outer Worlds 2. The studio has adhered closely to Xbox’s strategy of delivering a high volume of quality games to bolster Game Pass, achieving an impressive output of five games over five years from 2020 to 2025. Yet, despite this success, the developers have faced repercussions.
As Xbox grapples with its own challenges, including an anticipated 1,600 additional layoffs within the gaming division over the next year, the future of Obsidian appears uncertain. The studio, which recently celebrated its 25th anniversary, has navigated near-collapse multiple times throughout its history. The prospect of losing such a storied studio due to Xbox’s financial struggles raises concerns, especially as the company diverts resources towards AI initiatives and other ventures.
